Union Pacific(UNP) - 2024 Q3 - Quarterly Report

Financial Performance - The company reported earnings of $2.75 per diluted share on net income of$1.7 billion, with an operating ratio of 60.3% for Q3 2024, compared to earnings of $2.51 per diluted share and net income of$1.5 billion with an operating ratio of 63.4% in Q3 2023[72]. - Operating income rose by 11% to $2.4 billion, while operating expenses decreased by 2$18.129 billion, reflecting a 1% increase compared to $17.960 billion in the same period of 2023[76]. - Net income for the trailing twelve months ended September 30, 2024, was$6,637 million, up from $6,379 million in the previous year[110]. - Cash provided by operating activities increased to$6,684 million in the first nine months of 2024, compared to $5,984 million in the same period of 2023[113]. - Free cash flow for the same period was$1.855 billion, significantly up from $954 million in 2023, indicating a 94.5$5.768 billion, driven by a 6% volume increase and core pricing gains, despite a negative mix and lower fuel surcharge revenues[72][77]. - International intermodal business surged by 33% year-over-year, contributing to improved operating metrics, including a 5% increase in freight car velocity and locomotive productivity[73]. - Grain and grain products revenue increased by 12% to $923 million in Q3 2024, while coal and renewables revenue decreased by 17$405 million[81]. - The company experienced a 6% increase in total revenue carloads to 2.167 million in Q3 2024 compared to 2.052 million in Q3 2023[82]. - Premium freight revenues rose by 33% in Q3 2024 compared to Q3 2023, driven by increased international intermodal demand and business development efforts[87]. - Revenues from Mexico business increased by 7% to $724 million in Q3 2024, supported by a 2$3,675 million compared to $3,764 million in Q3 2023, driven by productivity and lower fuel prices[89]. - Fuel expenses decreased by 13$2.60 per gallon compared to $3.12 in Q3 2023[93]. - Gross ton-miles increased by 4$2,530 million, slightly down from $2,582 million in 2023[115]. - The capital plan for 2024 is expected to be approximately$3.4 billion, an 8% decrease from 2023[117]. - The cash flow conversion rate improved to 83% in 2024 from 72% in 2023, reflecting enhanced efficiency in converting net income to cash flow[120]. - During Q3 2024, the company generated $2.7 billion in cash from operating activities and repurchased$738 million in shares[121]. - As of September 30, 2024, the company had $947 million in cash and cash equivalents, with$2.0 billion available under its revolving credit facility[121]. Debt and Financial Obligations - Interest expense decreased by 6% in Q3 2024 to $314 million, attributed to a lower weighted-average debt level of$31.4 billion[99]. - Total contractual obligations as of September 30, 2024, amounted to $62.303 billion, with debt obligations comprising$58.298 billion[123]. - The company expects to remain in compliance with its debt covenants despite potential economic fluctuations[121]. - Adjusted debt to adjusted EBITDA ratio improved to 2.7 in September 2024, down from 3.0 in December 2023[110]. Taxation - Income tax expense increased by 23% in Q3 2024 to $518 million, driven by higher pre-tax income and lower deferred tax adjustments[100]. - The effective tax rate for year-to-date 2024 was 23.5%, up from 21.9% in 2023[100]. Future Outlook - There are no known trends or uncertainties that could materially adversely affect the company's financial condition or liquidity as of the reporting date[122]. - The company continues to evaluate its financial condition and liquidity under various economic scenarios to ensure sufficient cash generation capabilities[121]. - Forward-looking statements indicate potential impacts from geopolitical tensions and public health crises, which may affect future operations and financial results[125].